VAALCO Energy, Inc. (NYSE:EGY) today reported results for the
fourth quarter and full year 2016.
Fourth Quarter 2016 and recent highlights:
- Generated operating income of $0.8 million in the
fourth quarter of 2016 compared with a loss of $64.7 million in the
fourth quarter of 2015, an improvement of $65.5
million
- Closed acquisition of additional 2.98% working interest
(3.23% participating interest) in the Etame Marin block offshore
Gabon
- Produced an average of 3,682 barrels of oil equivalent
per day (BOEPD) in the fourth quarter of 2016, above the guidance
range of 3,300 to 3,600 BOEPD
- Successfully completed workovers on the South Tchibala
2H and Avouma 2H wells increasing net production to 4,600 barrels
of oil per day (BOPD) in January 2017
- Reported year-end reserves totaling 2.6 million barrels
of oil equivalent (MMBOE), reflecting 87% reserve replacement in
Gabon for 2016, with no capital spending on drilling new
wells
For the fourth quarter of 2016, VAALCO reported
a loss from continuing operations of $3.4 million, or a loss of
$0.06 per diluted share. In the same period in 2015, the Company
reported a loss from continuing operations of $70.5 million, or a
loss of $1.21 per diluted share. The loss in the fourth
quarter of 2015 included a $52.1 million non-cash impairment charge
primarily due to lower projected oil prices.
As a result of the Company’s decision to
discontinue operations in Angola and withdraw from its joint
operating agreement, the operating results of the Angola segment
have been classified as discontinued operations for all periods
presented in the consolidated statements of operations. The
loss from discontinued operations in the fourth quarter of 2016
totaled $0.3 million, or $0.00 loss per diluted share. In the
fourth quarter of 2015, there was a loss from discontinued
operations of $10.3 million, or $0.18 loss per diluted share.
The average realized price for crude oil in the
fourth quarter of 2016 was $46.62 per barrel, up 19% from $39.18
per barrel in the fourth quarter of 2015 and up 10% from $42.31 per
barrel in the third quarter of 2016. Adjusted EBITDAX totaled
$2.2 million in the fourth quarter of 2016 compared with $3.3
million in the same period of 2015, and $4.6 million in the third
quarter of 2016.
Adjusted EBITDAX is a Non-GAAP financial measure
and is described and reconciled to net loss in the attached table
under “Non-GAAP Financial Measures.”
Cary Bounds, VAALCO’s Chief Executive Officer
commented: “I am proud of the talented team at VAALCO and commend
them for the meaningful accomplishments we were able to achieve
together in 2016. We operated in a safe and environmentally
responsible manner without a recordable incident in 2016. We
successfully completed two well interventions utilizing a more cost
effective hydraulic workover unit versus the traditional method of
mobilizing a drilling rig and restored over 1,000 BOPD of net
production. We added additional interest in our Etame Marin block
offshore Gabon through an acquisition. We were able to replace
reserves almost equal to our production rate, while spending no
capital on drilling new wells. In sum, we were able to execute on
our corporate strategy and enhance value through operational
successes, cost reductions and opportunistic transactions.”
Bounds continued, “Looking ahead into 2017, we
will maintain our focus on maximizing margins, delivering on our
operational guidance and executing on our strategic plan.
Financially, we are looking to continue to bolster the balance
sheet and build a solid foundation of cash for future development
projects. In the fourth quarter of 2016, we entered into additional
crude oil put contracts in order to protect our cash flow and
minimize our downside risk in 2017, while preserving upside related
to oil price changes. Operationally, we are evaluating development
opportunities on our offshore Gabon asset that add value and
minimize decline. The Company is methodically seeking similar
opportunities in West Africa and internationally, where our strong
management and technical expertise gives us an advantage when
looking at growth opportunities. By continuing to execute our
strategy and deliver results, VAALCO is poised to add value to its
shareholders.”
Etame Marin Additional Interest
Acquisition
On November 22, 2016, VAALCO closed the
previously announced acquisition to acquire an additional 2.98%
working interest (3.23% participating interest) in the Etame Marin
block from Sojitz Etame Limited (“Sojitz”), which represents the
full interest owned by Sojitz in the concession. This
acquisition will continue to provide upside potential in net
production and reserves for VAALCO moving forward, without
requiring any additional staffing. The transaction was funded with
cash on hand.
Sale and Pending Sale of U.S.
Properties
On December 29, 2016, the Company closed the
previously announced sale of its interests in two Granite Wash gas
wells on the Hefley lease in North Texas. The two wells in
total were producing approximately 69 BOEPD net to VAALCO.
On October 17, 2016, the Company signed a letter
of intent to sell its entire acreage interests in the East Poplar
Unit in Montana for $250,000. The transaction is expected to
be concluded during the first half of 2017.
Offshore Gabon
In the fourth quarter of 2016, production
decreased 4% from 3,772 BOPD in the third quarter of 2016 to 3,620
BOPD. This was primarily due to the electrical submersible pump
(ESP) failures at the Avouma field. As previously reported, VAALCO
successfully completed workover operations with a cost effective
hydraulic workover unit on the South Tchibala 2-H and the Avouma
2-H wells and the wells were put back on production. The entire
operation was conducted safely and efficiently with no injuries or
threats to the environment. All personnel and equipment
utilized during the combined operations on the two wells have been
demobilized. The detailed inspection of the failed ESP
components continues and the Company expects that the cause of the
failures will be determined during the first half of 2017.
Onshore Gabon and Equatorial
Guinea
VAALCO continues to examine alternative, lower
cost development options for discoveries in the Mutamba Iroru
permit onshore Gabon, and in Block P offshore Equatorial Guinea.
These discoveries present unique development opportunities that
will be re-evaluated as prices continue to recover.
2016 Fourth Quarter Financial
Results
Total oil and natural gas sales for the fourth
quarter of 2016 were $15.3 million, compared to $17.5 million for
the same period in 2015, and $14.6 million in the third quarter of
2016. Fourth quarter 2016 revenue was positively impacted by
the increase in realized pricing, but negatively impacted by
reduced sales volumes compared to the fourth quarter of 2015 and
the third quarter of 2016.
During the fourth quarter of 2016, VAALCO sold
approximately 326,000 net barrels of oil at an average price of
$46.62 per barrel, compared to 457,000 net barrels at an average
price of $39.18 per barrel in the fourth quarter of 2015, and
344,000 net barrels at an average price of $42.31 per barrel in the
third quarter of 2016
Costs and Expenses
Total production expense for the fourth quarter
of 2016 was $11.8 million, which includes $3.4 million related to
workovers performed during the quarter. Total production expense,
excluding workovers, was $8.4 million, or $25.60 per BOE of sales,
for the fourth quarter of 2016. This is a decrease of $0.9
million compared to $9.3 million, or $19.99 per BOE of sales, for
the fourth quarter of 2015 and an increase of $1.1 million compared
to $7.3 million, or $21.04 per BOE in the third quarter of 2016.
While actual costs declined compared to the same period in the
prior year, the cost per BOE rose due to lower sales
volumes.
Depreciation, depletion and amortization
(DD&A) expense was $1.1 million, or $3.45 per BOE of sales in
the three months ended December 31, 2016 compared to $9.5 million,
or $20.56 per BOE in the comparable period in 2015, and $1.6
million, or $4.60 per BOE in the third quarter of 2016.
General and administrative (G&A) expense for
the three months ended December 31, 2016 was $1.7 million, or $5.22
per BOE, as compared to $2.9 million, or $6.30 per BOE in the three
months ended December 31, 2015, and $1.6 million, or $4.55 per BOE
in the third quarter of 2016. The Company has taken significant
steps to reduce overall G&A costs over the past 18 months, with
decreases realized in personnel costs, incentive compensation,
services and various other cost categories. General and
administrative expense includes $0.1 million, $0.8 million, and
($0.9) million of non-cash compensation expense for the quarters
ended December 31, 2016, December 31, 2015, and September 30, 2016,
respectively.
Income tax expense for the fourth quarter of
2016 was $2.4 million compared to $4.2 million for the same period
in 2015, and $2.2 million in the third quarter of 2016. The
decrease in tax compared to the same period a year ago is primarily
attributable to lower revenues in the Company’s operations in
Gabon.
Hedging
In order to limit VAALCO’s commodity price risk,
the Company added to its hedging position. As of December 31, 2016,
VAALCO had unexpired crude oil put contracts covering 792,000
barrels of anticipated sales volumes for the period from January
2017 through December 31, 2017 at a weighted average price of
$48.46. The Company recorded a non-cash mark-to-market charge of
$0.9 million and $0.2 million related to the existing puts during
the fourth and third quarters of 2016, respectively, which was
included in other, net in the Consolidated Statements of
Operations. The Company has not entered into additional derivative
contracts since December 31, 2016.
Year End 2016 Reserves
With the closing of the U.S. property sale, 100%
of year-end 2016 reserves were related to oil in Gabon. As oil
prices improve in the future, which should extend the economic
limit of the Etame Marin block, the Company would expect reserves
to increase. VAALCO has numerous identified development drilling
locations that would also become economic in a higher pricing
environment, which would also potentially reclassify reserves from
probable to proved.
|
|
|
MMBOE |
Proved Reserves at December 31, 2015 |
3.0 |
|
2016 Production |
(1.5 |
) |
Reduction due to lower crude prices |
(0.6 |
) |
Disposition of U.S. properties |
(0.2 |
) |
Acquisition of additional interest in Etame Marin
block |
0.3 |
|
Performance additions |
1.6 |
|
Proved Reserves at December 31, 2016 |
2.6 |
|
Capital Investments/Balance
Sheet
During the three months ended December 31, 2016,
the Company did not undertake any new capital projects. An
offset was recorded, during the fourth quarter, for the Company’s
accrual basis capital expenditures totaling $2.1 million, which is
primarily related to downward adjustments to capital expense
recorded in 2015 in connection to the Company’s prior-year drilling
program in addition to current year inventory adjustments. The
capital expenditures for the year ended December 31, 2016 on a cash
basis were $8.7 million primarily for equipment and
enhancements.
At the end of the fourth quarter, VAALCO had an
unrestricted cash balance of $20.5 million. This does not
include an additional $0.7 million in restricted cash (related
primarily to deposits in Gabon) classified as current assets or the
additional $0.9 million of restricted cash classified as long
term.
At December 31, 2016, debt, net of deferred
financing costs, totaled $14.4 million, of which $7.5 million was
classified as current, reflecting the repayment terms of the new
loan agreement with the International Finance Corporation
(“IFC”).
Conference Call
As previously announced, the Company will hold a
conference call to discuss its fourth quarter financial and
operating results tomorrow, Tuesday, March 14, 2017, at 8:00 a.m.
Central Time (9:00 a.m. Eastern Time). Interested parties may
participate by dialing (844) 841-1668. International parties
may dial (661) 378-9859. The confirmation code is
77612453. This call will also be webcast on VAALCO’s website
at www.vaalco.com.
An audio replay will be available beginning
approximately two hours after the end of the call and be available
through March 21, 2017 by dialing (855) 859-2056.
International parties may dial (404) 537-3406. The
confirmation code is 77612453.
Forward Looking Statements
This document includes "forward-looking
statements" within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act
of 1934, as amended. All statements, other than statements of
historical facts, included in this document that address
activities, events, plans, expectations, objectives or developments
that VAALCO expects, believes or anticipates will or may occur in
the future are forward-looking statements. These statements
may include amounts due in connection with the Company’s withdrawal
from Angola, expected sources of future capital funding and future
liquidity, future operating losses, future changes in oil and
natural gas prices, future strategic alternatives, capital
expenditures, future drilling plans, prospect evaluations,
negotiations with governments and third parties including with the
government of Gabon in connection with a revised production sharing
contract, expectations regarding processing facilities, reserve
growth, and other issues related to our exit from Angola.
These statements are based on assumptions made by VAALCO based on
its experience and perception of historical trends, current
conditions, expected future developments and other factors it
believes are appropriate in the circumstances. Such
statements are subject to a number of assumptions, risks and
uncertainties, many of which are beyond VAALCO's control.
These risks include, but are not limited to, oil and gas price
volatility, inflation, general economic conditions, the Company's
success in discovering, developing and producing reserves,
decisions by our current lender or future lenders, the risks
associated with liquidity, the risk that our negotiations with the
governments of Gabon and Republic of Angola will be unsuccessful,
lack of availability of goods, services and capital, environmental
risks, drilling risks, foreign regulatory and operational risks,
and regulatory changes. These and other risks are further
described in VAALCO's annual report on Form 10-K for the year ended
December 31, 2016, which will be filed shortly, and other reports
filed with the SEC which can be reviewed at http://www.sec.gov, or
which can be received by contacting VAALCO at 9800 Richmond Avenue,
Suite 700, Houston, Texas 77042, (713) 623-0801. Investors
are cautioned that forward-looking statements are not guarantees of
future performance and that actual results or developments may
differ materially from those projected in the forward-looking
statements. VAALCO disclaims any intention or obligation to
update or revise any forward-looking statements, whether as a
result of new information, future events, or otherwise.
About VAALCO
VAALCO Energy, Inc. is a Houston-based
independent energy company principally engaged in the acquisition,
exploration, development and production of crude oil. The Company's
properties and exploration acreage are located primarily in Gabon
and Equatorial Guinea in West Africa.
VAALCO ENERGY, INC AND SUBSIDIARIESCondensed Consolidated
Balance Sheets (Unaudited) (in thousands, except share and per
share amounts)
|
|
|
|
|
|
|
|
|
December 31, |
|
December 31, |
|
|
2016 |
|
|
2015 |
|
ASSETS |
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
20,474 |
|
|
$ |
25,357 |
|
Restricted cash |
|
|
741 |
|
|
|
1,048 |
|
Receivables: |
|
|
|
|
|
|
Trade |
|
|
6,751 |
|
|
|
5,353 |
|
Accounts
with partners, net of allowance |
|
|
3,297 |
|
|
|
19,765 |
|
Other,
net of allowance |
|
|
120 |
|
|
|
42 |
|
Crude oil
inventory |
|
|
913 |
|
|
|
639 |
|
Materials
and supplies |
|
|
84 |
|
|
|
194 |
|
Prepayments and other |
|
|
3,956 |
|
|
|
2,975 |
|
Current
assets - discontinued operations |
|
|
2,139 |
|
|
|
8,369 |
|
Total
current assets |
|
|
38,475 |
|
|
|
63,742 |
|
Property and equipment
- successful efforts method: |
|
|
|
|
|
|
Wells,
platforms and other production facilities |
|
|
389,231 |
|
|
|
412,593 |
|
Undeveloped acreage |
|
|
10,000 |
|
|
|
10,000 |
|
Equipment
and other |
|
|
9,779 |
|
|
|
10,805 |
|
|
|
|
409,010 |
|
|
|
433,398 |
|
Accumulated
depreciation, depletion and amortization |
|
|
(380,991 |
) |
|
|
(400,041 |
) |
Net
property and equipment |
|
|
28,019 |
|
|
|
33,357 |
|
Other noncurrent
assets: |
|
|
|
|
|
|
Restricted cash |
|
|
918 |
|
|
|
15,830 |
|
Value
added tax and other receivable, net of allowance |
|
|
5,110 |
|
|
|
4,221 |
|
Deferred
finance charges |
|
|
- |
|
|
|
1,655 |
|
Abandonment funding |
|
|
8,510 |
|
|
|
5,137 |
|
Noncurrent assets - discontinued operations |
|
|
- |
|
|
|
16 |
|
Total
assets |
|
$ |
81,032 |
|
|
$ |
123,958 |
|
LIABILITIES AND
SHAREHOLDERS' EQUITY |
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
Accounts
payable |
|
$ |
19,096 |
|
|
$ |
44,140 |
|
Accrued
liabilities and other |
|
|
10,506 |
|
|
|
18,447 |
|
Current
portion of long-term debt |
|
|
7,500 |
|
|
|
- |
|
Current
liabilities - discontinued operations |
|
|
18,452 |
|
|
|
4,129 |
|
Total
current liabilities |
|
|
55,554 |
|
|
|
66,716 |
|
Asset retirement
obligations |
|
|
18,612 |
|
|
|
16,166 |
|
Other long term
liabilities |
|
|
284 |
|
|
|
- |
|
Long-term debt,
excluding current portion |
|
|
6,940 |
|
|
|
15,000 |
|
Total
liabilities |
|
|
81,390 |
|
|
|
97,882 |
|
Commitments and
contingencies |
|
|
|
|
|
|
Shareholders’ equity
(deficit): |
|
|
|
|
|
|
Preferred
stock, none issued, 500,000 shares authorized, $25 par value |
|
|
- |
|
|
|
- |
|
Common
stock, 66,109,565 and 66,041,338 shares issued, $0.10 par
value, 100,000,000 shares authorized |
|
|
6,611 |
|
|
|
6,604 |
|
Additional paid-in capital |
|
|
70,268 |
|
|
|
69,118 |
|
Less
treasury stock, 7,555,095 and 7,514,169 shares at cost |
|
|
(37,933 |
) |
|
|
(37,882 |
) |
Retained
deficit |
|
|
(39,304 |
) |
|
|
(11,764 |
) |
Total
shareholders' equity (deficit) |
|
|
(358 |
) |
|
|
26,076 |
|
Total
liabilities and shareholders' equity (deficit) |
|
$ |
81,032 |
|
|
$ |
123,958 |
|
VAALCO ENERGY, INC AND SUBSIDIARIESConsolidated Statements of
Operations(Unaudited)(in thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Year Ended |
|
|
December 31, 2016 |
|
December 31, 2015 |
|
September 30, 2016 (1) |
|
December 31, 2016 |
|
December 31, 2015 |
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil and
gas sales |
|
$ |
15,326 |
|
|
$ |
17,523 |
|
|
$ |
14,635 |
|
|
$ |
59,784 |
|
|
$ |
80,445 |
|
Operating costs and
expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Production expense |
|
|
11,830 |
|
|
|
13,459 |
|
|
|
7,162 |
|
|
|
37,586 |
|
|
|
40,096 |
|
Exploration expense |
|
|
1 |
|
|
|
708 |
|
|
|
2 |
|
|
|
5 |
|
|
|
10,409 |
|
Depreciation, depletion and amortization |
|
|
1,139 |
|
|
|
9,514 |
|
|
|
1,607 |
|
|
|
6,926 |
|
|
|
32,998 |
|
General
and administrative expense |
|
|
1,722 |
|
|
|
2,915 |
|
|
|
1,588 |
|
|
|
9,561 |
|
|
|
12,294 |
|
Impairment of proved properties |
|
|
- |
|
|
|
52,114 |
|
|
|
88 |
|
|
|
88 |
|
|
|
81,322 |
|
Other
operating expense |
|
|
(1,106 |
) |
|
|
- |
|
|
|
324 |
|
|
|
8,853 |
|
|
|
- |
|
General
and administrative related to shareholder matters |
|
|
18 |
|
|
|
2,372 |
|
|
|
85 |
|
|
|
(332 |
) |
|
|
2,372 |
|
Bad debt
expense (recovery) and other |
|
|
645 |
|
|
|
(358 |
) |
|
|
63 |
|
|
|
1,222 |
|
|
|
2,968 |
|
Total
operating costs and expenses |
|
|
14,249 |
|
|
|
80,724 |
|
|
|
10,919 |
|
|
|
63,909 |
|
|
|
182,459 |
|
Other
operating income (loss), net |
|
|
(258 |
) |
|
|
(1,490 |
) |
|
|
(26 |
) |
|
|
(266 |
) |
|
|
(1,092 |
) |
Operating income
(loss) |
|
|
819 |
|
|
|
(64,691 |
) |
|
|
3,690 |
|
|
|
(4,391 |
) |
|
|
(103,106 |
) |
Other
income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income |
|
|
1 |
|
|
|
- |
|
|
|
1 |
|
|
|
3 |
|
|
|
12 |
|
Interest
expense |
|
|
(329 |
) |
|
|
(218 |
) |
|
|
(328 |
) |
|
|
(2,616 |
) |
|
|
(1,337 |
) |
Other,
net |
|
|
(1,482 |
) |
|
|
(1,357 |
) |
|
|
(149 |
) |
|
|
(2,015 |
) |
|
|
(1,536 |
) |
Total
other income (expense) |
|
|
(1,810 |
) |
|
|
(1,575 |
) |
|
|
(476 |
) |
|
|
(4,628 |
) |
|
|
(2,861 |
) |
Income (loss) from
continuing operations before income taxes |
|
|
(991 |
) |
|
|
(66,266 |
) |
|
|
3,214 |
|
|
|
(9,019 |
) |
|
|
(105,967 |
) |
Income tax expense |
|
|
2,364 |
|
|
|
4,242 |
|
|
|
2,198 |
|
|
|
9,248 |
|
|
|
14,587 |
|
Income (loss) from
continuing operations |
|
|
(3,355 |
) |
|
|
(70,508 |
) |
|
|
1,016 |
|
|
|
(18,267 |
) |
|
|
(120,554 |
) |
Income (loss) from
discontinued operations, net of tax |
|
|
(286 |
) |
|
|
(10,271 |
) |
|
|
(15,783 |
) |
|
|
(8,283 |
) |
|
|
(38,102 |
) |
Net loss |
|
$ |
(3,641 |
) |
|
$ |
(80,779 |
) |
|
$ |
(14,767 |
) |
|
$ |
(26,550 |
) |
|
$ |
(158,656 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net loss per
share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
(loss) from continuing operations |
|
$ |
(0.06 |
) |
|
$ |
(1.21 |
) |
|
$ |
0.02 |
|
|
$ |
(0.31 |
) |
|
$ |
(2.07 |
) |
Income
(loss) from discontinued operations |
|
|
(0.00 |
) |
|
|
(0.18 |
) |
|
|
(0.27 |
) |
|
|
(0.14 |
) |
|
|
(0.65 |
) |
Net
loss |
|
$ |
(0.06 |
) |
|
$ |
(1.38 |
) |
|
$ |
(0.25 |
) |
|
$ |
(0.45 |
) |
|
$ |
(2.72 |
) |
Basic
weighted average shares outstanding |
|
|
58,554 |
|
|
|
58,473 |
|
|
|
58,708 |
|
|
|
58,384 |
|
|
|
58,289 |
|
Diluted net loss per
share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
(loss) from continuing operations |
|
$ |
(0.06 |
) |
|
$ |
(1.21 |
) |
|
$ |
0.02 |
|
|
$ |
(0.31 |
) |
|
$ |
(2.07 |
) |
Income
(loss) from discontinued operations |
|
|
(0.00 |
) |
|
|
(0.18 |
) |
|
|
(0.27 |
) |
|
|
(0.14 |
) |
|
|
(0.65 |
) |
Net
loss |
|
$ |
(0.06 |
) |
|
$ |
(1.38 |
) |
|
$ |
(0.25 |
) |
|
$ |
(0.45 |
) |
|
$ |
(2.72 |
) |
Basic weighted average shares outstanding |
|
|
58,554 |
|
|
|
58,473 |
|
|
|
58,708 |
|
|
|
58,384 |
|
|
|
58,289 |
|
1) In the fourth quarter of 2016, we adopted ASU 2016-09
related to stock-based compensation. The Company has applied a
modified retrospective basis of adoption in which each of the
quarters in 2016 have been revised to reflect the application of
this new standard and a $1.0 million cumulative effect adjustment
was reflected in retained earnings on January 1, 2016. Results for
the three months ended September 30, 2016 includes a $0.8 million
adjustment to reduce stock-based compensation as a result of this
adoption.
VAALCO ENERGY, INC AND SUBSIDIARIES Consolidated Statements of
Cash Flows (Unaudited) (in thousands)
|
|
|
|
|
|
|
|
|
Year Ended |
|
|
December 31, 2016 |
|
December 31, 2015 |
CASH FLOWS FROM
OPERATING ACTIVITIES: |
|
|
|
|
|
|
Net loss |
|
$ |
(26,550 |
) |
|
$ |
(158,656 |
) |
Adjustments to
reconcile net loss to net cash provided by (used in) operating
activities: |
|
|
|
|
|
|
Loss from
discontinued operations |
|
|
8,283 |
|
|
|
38,102 |
|
Depreciation, depletion and amortization |
|
|
6,926 |
|
|
|
32,998 |
|
Other
amortization |
|
|
1,424 |
|
|
|
304 |
|
Deferred
taxes |
|
|
- |
|
|
|
1,349 |
|
Unrealized foreign exchange (gain) loss |
|
|
(32 |
) |
|
|
(5,243 |
) |
Dry hole
costs and impairment of unproved leasehold |
|
|
- |
|
|
|
10,244 |
|
Stock-based compensation |
|
|
192 |
|
|
|
3,810 |
|
Commodity
derivatives loss |
|
|
1,711 |
|
|
|
- |
|
Bad debt
provision |
|
|
1,222 |
|
|
|
2,699 |
|
Other
operating loss, net |
|
|
266 |
|
|
|
1,092 |
|
Impairment of proved properties |
|
|
88 |
|
|
|
81,322 |
|
Change in
operating assets and liabilities: |
|
|
|
|
|
|
Trade
receivables |
|
|
(1,050 |
) |
|
|
14,174 |
|
Accounts
with partners |
|
|
16,284 |
|
|
|
(13,816 |
) |
Other
receivables |
|
|
(18 |
) |
|
|
(609 |
) |
Crude oil
inventory |
|
|
(192 |
) |
|
|
1,266 |
|
Materials
and supplies |
|
|
125 |
|
|
|
92 |
|
Value
added tax and other receivable |
|
|
(1,937 |
) |
|
|
(2,286 |
) |
Other
long term assets |
|
|
(2,827 |
) |
|
|
(1,566 |
) |
Prepayments and other |
|
|
392 |
|
|
|
3,037 |
|
Accounts
payable |
|
|
(15,459 |
) |
|
|
30,187 |
|
Accrued
liabilities and other |
|
|
(4,586 |
) |
|
|
3,034 |
|
Net cash
provided by (used in) continuing operating activities |
|
|
(15,738 |
) |
|
|
41,534 |
|
Net cash
provided by (used in) discontinued operating activities |
|
|
12,286 |
|
|
|
(2,659 |
) |
Net cash
provided by (used in) operating activities |
|
|
(3,452 |
) |
|
|
38,875 |
|
CASH FLOWS
FROM INVESTING ACTIVITIES: |
|
|
|
|
Decrease
in restricted cash |
|
|
15,219 |
|
|
|
5,536 |
|
Acquisitions |
|
|
(5,692 |
) |
|
|
- |
|
Property
and equipment expenditures |
|
|
(8,705 |
) |
|
|
(68,067 |
) |
Proceeds
from sales of oil and gas properties |
|
|
830 |
|
|
|
398 |
|
Other,
net |
|
|
(2,939 |
) |
|
|
- |
|
Net cash
used in continuing investing activities |
|
|
(1,287 |
) |
|
|
(62,133 |
) |
Net cash
used in discontinued investing activities |
|
|
- |
|
|
|
(20,877 |
) |
Net cash
used in investing activities |
|
|
(1,287 |
) |
|
|
(83,010 |
) |
CASH FLOWS
FROM FINANCING ACTIVITIES: |
|
|
|
|
Proceeds
from the issuances of common stock |
|
|
- |
|
|
|
441 |
|
Debt
issuance costs |
|
|
(93 |
) |
|
|
- |
|
Purchases
of treasury stock |
|
|
(51 |
) |
|
|
- |
|
Net cash provided by
(used in) financing activities |
|
|
(144 |
) |
|
|
441 |
|
NET CHANGE IN CASH AND
CASH EQUIVALENTS |
|
|
(4,883 |
) |
|
|
(43,694 |
) |
CASH AND CASH
EQUIVALENTS -- |
|
|
|
|
|
|
BEGINNING
OF YEAR |
|
|
25,357 |
|
|
|
69,051 |
|
END OF
YEAR |
|
$ |
20,474 |
|
|
$ |
25,357 |
|
VAALCO ENERGY, INC AND SUBSIDIARIESSelected Financial and
Operating Statistics(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Year Ended |
|
|
December 31, 2016 |
|
December 31, 2015 |
|
September 30, 2016 |
|
December 31, 2016 |
|
December 31, 2015 |
NET SALES DATA: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil
(MBbls) |
|
|
326 |
|
|
|
457 |
|
|
344 |
|
|
1,488 |
|
|
1,682 |
Natural
Gas (MMcf) |
|
|
25 |
|
|
|
33 |
|
|
32 |
|
|
124 |
|
|
181 |
Oil
equivalents (MBOE) |
|
|
330 |
|
|
|
463 |
|
|
349 |
|
|
1,509 |
|
|
1,712 |
Average
daily sales volumes (BOE/day) |
|
|
3,587 |
|
|
|
5,033 |
|
|
3,793 |
|
|
4,134 |
|
|
4,691 |
NET PRODUCTION
DATA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil
(MBbls) |
|
|
335 |
|
|
|
442 |
|
|
348 |
|
|
1,518 |
|
|
1,659 |
Natural
Gas (MMcf) |
|
|
25 |
|
|
|
33 |
|
|
32 |
|
|
124 |
|
|
181 |
Oil
equivalents (MBOE) |
|
|
339 |
|
|
|
449 |
|
|
353 |
|
|
1,538 |
|
|
1,688 |
Average daily production volumes (BOE/day) |
3,682 |
|
|
|
4,876 |
|
|
3,836 |
|
|
4,214 |
|
|
4,625 |
AVERAGE SALES
PRICES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil
($/Bbl) |
|
$ |
46.62 |
|
|
$ |
39.18 |
|
$ |
42.31 |
|
$ |
40.13 |
|
$ |
47.85 |
Natural
Gas ($/Mcf) |
|
|
2.35 |
|
|
|
1.88 |
|
|
2.37 |
|
|
1.95 |
|
|
2.21 |
Weighted
average price ($/BOE) |
|
|
46.44 |
|
|
|
38.85 |
|
|
42.05 |
|
|
39.62 |
|
|
47.24 |
COSTS AND EXPENSES (PER
BOE OF SALES): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Production expense |
|
$ |
35.85 |
|
|
$ |
29.07 |
|
$ |
20.52 |
|
$ |
24.91 |
|
$ |
23.42 |
Production expense, excluding workovers* |
|
|
25.60 |
|
|
|
19.99 |
|
|
21.04 |
|
|
20.43 |
|
|
20.99 |
Depreciation, depletion and amortization |
|
|
3.45 |
|
|
|
20.56 |
|
|
4.60 |
|
|
4.59 |
|
|
19.27 |
General
and administrative expense** |
|
|
5.22 |
|
|
|
6.30 |
|
|
4.55 |
|
|
0.06 |
|
|
7.18 |
Property and equipment
expenditures, cash basis |
|
$ |
(1,764 |
) |
|
$ |
17,726 |
|
$ |
- |
|
$ |
8,705 |
|
$ |
68,067 |
*Workover costs excluded from the three months
ended December 31, 2016, December 31, 2015 and September 30, 2016
are $3.4 million, $4.2 million and ($0.2 million).
**General and administrative expenses include
$0.22, $1.70 and ($2.69) per BOE of non-cash stock-based
compensation expense in the three months ended December 31, 2016,
December 31, 2015 and September 30, 2016, respectively. As
discussed in Note 4 and the Selected Quarterly Financial
Information to the Consolidated Statements of Operations, results
for the three months ended September 30, 2016 include an adjustment
for the adoption of ASU 2016-09.
NON-GAAP FINANCIAL MEASURES
Adjusted EBITDAX is a supplemental non-GAAP
financial measure used by VAALCO’s management and by external users
of the Company’s financial statements, such as industry analysts,
lenders, rating agencies, investors and others who follow the
industry as an indicator of the Company’s ability to internally
fund exploration and development activities and to service or incur
additional debt. Adjusted EBITDAX is a non-GAAP financial measure
and as used herein represents net income before discontinued
operations, interest income (expense) net, income tax expense,
depletion, depreciation and amortization, impairment of proved
properties, exploration expense, non-cash and other items including
stock compensation expense and commodity derivative loss.
Adjusted EBITDAX has significant limitations,
including that it does not reflect the Company’s cash requirements
for capital expenditures, contractual commitments, working capital
or debt service. Adjusted EBITDAX should not be considered as a
substitute for net income (loss), operating income (loss), cash
flows from operating activities or any other measure of financial
performance or liquidity presented in accordance with GAAP.
Adjusted EBITDAX excludes some, but not all, items that affect net
income (loss) and operating income (loss) and these measures may
vary among other companies. Therefore, the Company’s Adjusted
EBITDAX may not be comparable to similarly titled measures used by
other companies.
The table below reconciles the most directly
comparable GAAP financial measures to Adjusted EBITDAX.
VAALCO ENERGY, INC AND SUBSIDIARIESReconciliations of Non-GAAP
Measures(Unaudited)(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation
of Net loss to Adjusted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDAX |
|
Three Months Ended |
|
Year Ended |
|
|
December 31, 2016 |
|
December 31, 2015 |
|
September 30, 2016 (1) |
|
December 31, 2016 |
|
December 31, 2015 |
Net loss |
|
$ |
(3,641 |
) |
|
$ |
(80,779 |
) |
|
|
(14,767 |
) |
|
$ |
(26,550 |
) |
|
$ |
(158,656 |
) |
Add back: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impact of
discontinued operations |
|
|
286 |
|
|
|
10,271 |
|
|
|
15,783 |
|
|
|
8,283 |
|
|
|
38,102 |
|
Interest
(income) expense, net |
|
|
328 |
|
|
|
218 |
|
|
|
327 |
|
|
|
2,613 |
|
|
|
1,325 |
|
Income
tax expense |
|
|
2,364 |
|
|
|
4,242 |
|
|
|
2,198 |
|
|
|
9,248 |
|
|
|
14,587 |
|
Depreciation, depletion and amortization |
|
|
1,139 |
|
|
|
9,514 |
|
|
|
1,607 |
|
|
|
6,926 |
|
|
|
32,998 |
|
Impairment of proved properties |
|
|
- |
|
|
|
52,114 |
|
|
|
88 |
|
|
|
88 |
|
|
|
81,322 |
|
Exploration expense |
|
|
1 |
|
|
|
708 |
|
|
|
2 |
|
|
|
5 |
|
|
|
10,409 |
|
Non-cash or unusual
items: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation (1) |
|
|
72 |
|
|
|
786 |
|
|
|
(940 |
) |
|
|
192 |
|
|
|
3,810 |
|
Shareholder matters |
|
|
18 |
|
|
|
2,372 |
|
|
|
85 |
|
|
|
(332 |
) |
|
|
2,372 |
|
Commodity
derivative loss |
|
|
939 |
|
|
|
- |
|
|
|
194 |
|
|
|
1,711 |
|
|
|
- |
|
Crude
sweetening project cancellation |
|
|
- |
|
|
|
563 |
|
|
|
- |
|
|
|
- |
|
|
|
1,887 |
|
Equipment
write-offs |
|
|
- |
|
|
|
3,346 |
|
|
|
- |
|
|
|
266 |
|
|
|
1,524 |
|
Bad debt
expense |
|
|
645 |
|
|
|
(51 |
) |
|
|
63 |
|
|
|
1,222 |
|
|
|
2,699 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDAX |
|
$ |
2,151 |
|
|
$ |
3,304 |
|
|
$ |
4,640 |
|
|
$ |
3,672 |
|
|
$ |
32,379 |
|
1) As discussed in Note 1 to the Consolidated
Statements of Operations, results for the three months ended
September 30, 2016 include an adjustment for the adoption of ASU
2016-09.
Investor Contact
Elizabeth Prochnow
713-623-0801
Vaalco Energy (NYSE:EGY)
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